Question: Firms HD and LD are identical except for their level of debt and the interest rates they pay on debtHD has more debt and pays

Firms HD and LD are identical except for their level of debt and the interest rates they pay on debtHD has more debt and pays a higher interest rate on that debt. Based on the data given below, what is the difference between the two firms ROEs? Applicable to Both Firms Firm HDs Data Firm LDs Data Assets $300 Debt ratio 60% Debt ratio 20% EBIT $80 Interest rate 15% Interest rate 11% Tax rate 40% Applicable to Both Firms Firm HDs Data Firm LDs Data Assets $200 Debt ratio 50% Debt

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